ISED calls for 4-stage re-railing package to put MSMEs on track

The Institute of Small Enterprises and Development (ISED) has submitted detailed recommendations on the reopening strategy for the MSME sector.

The estimated 42.5-million (registered and unregistered together) MSMEs, employing 40 per cent of India's workforce, and turning out about 8000 varied products has been demanding a comprehensive relief package from the government.

The ISED Scoping Paper “Towards a re-railing package for the MSME economy of India” brings out the dimensions of the MSME problem in the country, and reviews the mitigation strategies adopted by various countries.

Pandemic, a great opportunity

Authored by PM Mathew, ISED Director, and JMI Sait, Senior Fellow and former Country Director of the United Nations Industrial Development Organization, it points out that the pandemic offers a great opportunity for India to harness some of its hidden potentials. The country’s unique capability is its decentralised manufacturing system, where tools and components of big manufacturers come from small factories and workshops. This is not the case with the industrialised countries, where the SME stream is relatively new and is dominated by services such as restaurants and retail outlets.

India's MSMEs have huge processing capabilities that are identified with towns and cities such as Coimbatore, Tiruchirapalli, Tirupur, Bengaluru, Chennai, Surat and Pune. Such capabilities, however, are getting lost; the recent industrial distress in some of these centres is proof. This is the right time for introspection, the document says.

The ISED document advocates opening up of the MSME units in four phases. The first phase being manufacturing hubs that can offer the essential items for fighting Covid-19. While the global media predicts the pandemic to last for several months, this is a great opportunity for SMEs to nourish the national and global markets by producing items like masks, gloves hospital equipment, etc, the paper says.

Subsector-based intervention

The SME think-tank calls for impact-oriented strategic moves for putting the SMEs on track. Rather than having a blanket relief package, a subsector-based intervention, with the active participation of the subsector associations of the country would work.

The first phase of the programme needs to be a carefully planned with the opening up of four subsectors — pharmaceuticals, textiles, hospital equipment, and rubber and rubber products. It recommends the setting up of four task forces by the government so that the strategy can be worked out in a truly participative manner.